European Policy – Brexit Legalhttps://www.brexitlegal.com
Legal and Public Policy Considerations of the EU ReferendumThu, 16 May 2019 08:39:58 +0000en-UShourly1https://wordpress.org/?v=4.9.10Brexit Insight From the EU-27: Spainhttps://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-spain/
https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-spain/#respondThu, 16 May 2019 08:39:58 +0000https://www.brexitlegal.com/?p=1595In March 2019, the Spanish government adopted a set of contingency measures in case the UK would leave the EU without reaching an agreement. In view of the good relationship between the two countries, the Spanish government aims at maintaining the status quo of their mutual commercial relationships and at preserving the rights of UK … Continue Reading

]]>In March 2019, the Spanish government adopted a set of contingency measures in case the UK would leave the EU without reaching an agreement.

In view of the good relationship between the two countries, the Spanish government aims at maintaining the status quo of their mutual commercial relationships and at preserving the rights of UK and Spanish citizens and companies operating cross-border.

Spain represents a core market for major UK investors that see opportunities in the Spanish renewable markets, real estate investments and a wide range of industries and professional services sectors.

]]>https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-spain/feed/0Brexit Insight From the EU-27: Polandhttps://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-poland/
https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-poland/#respondMon, 13 May 2019 11:08:35 +0000https://www.brexitlegal.com/?p=1591UK financial market entities in Poland – A Polish Brexit bill, passed on 15 March 2019, provides a transition period for the business operations of UK financial market entities in Poland, starting from the date of a “no-deal” Brexit. This period will allow businesses to conduct any legal operations needed to cease legal relationships entered … Continue Reading

]]>UK financial market entities in Poland – A Polish Brexit bill, passed on 15 March 2019, provides a transition period for the business operations of UK financial market entities in Poland, starting from the date of a “no-deal” Brexit. This period will allow businesses to conduct any legal operations needed to cease legal relationships entered into before the day of “no-deal” Brexit, or to establish a legal basis to continue to operate in Poland (i.e. by obtaining the correct permit). The Polish Brexit bill names specific financial market business types and contains details on permitted and forbidden activities within the transition period. The length of the transition period differs depending on business type, but typically does not exceed 12 to 24 months. The approach of the Polish authorities is intended to create a mechanism for UK entities to cease their activities and allow them time to do this. This is a different mechanism from the one applied, for example, in Germany, according to which, the German financial market supervision authority shall grant the extension of passporting rights resulting from EU laws. The Polish Brexit bill seems to be stricter, but creates a clear and transparent set of rules for the contingency of a “no-deal” Brexit, at least with regard to the time aspect of the transition period for the UK firms.

UK-regulated professionals operating in Poland – A second Polish Brexit bill, also passed on 15 March 2019, provides that decisions issued in Poland recognising the qualifications of regulated professions based on their UK qualifications will continue to be recognised in Poland. A transition period applies for applications for recognitions that are in progress.

Immigration status of UK nationals in Poland – A third Polish Brexit bill, also passed on 15 March 2019, provides that British nationals residing in Poland will have 12 months from the date of a “no-deal” Brexit to confirm their rights by obtaining a temporary residence permit or permanent residence. The right to apply will be granted to all British nationals and their family members, even if they are not British citizens: spouses and children (up to 21 and dependent) and parents (dependent), who had been legally residing in Poland until the day of the UK’s withdrawal from the European Union.

Poland’s government strongly favours a Brexit on the basis of the Withdrawal Agreement and is against a “no-deal” Brexit. The most important issue for the Polish government is the status of Poles living in the UK, which the government states is dealt with satisfactorily in the Withdrawal Agreement. If there were a “no-deal” Brexit, Poland’s Prime Minister has announced that he has an understanding with the UK government that would also protect the rights of Poles living in the UK.

Further, the government has set aside an additional PLN 1.5 billion (c. £304 million/€350 million) in the 2019 budget to pay for the expected increase in member state allocations payable to the EU.

A key aspect is that following Brexit on the basis of the Withdrawal Agreement, Poland’s business with the UK will be regulated on the same basis as that of other EU member states. Thus, the vast majority of the advice provided to Polish businesses is to keep up-to-date on the guidance issued by the European Commission. The key areas of focus for Polish businesses are:

Prepare for dealing with the transfer of personal data to the UK

Support for firms exporting to and importing from the UK with regard to customs, tariff and regulatory issues, with particular emphasis on customs duty and VAT registration

Pharmaceutical companies – follow updates of the European Commission regarding the registration of medicinal products

Export of agricultural products, plants and plant products to the UK

However, several Polish-specific issues will arise upon Brexit. Polish law restricts the acquisition of real property, as well as stakes in companies holding title to real property, obliging foreigners to obtain a permit for such transaction. The law provides that EEA businesses are exempt from such restrictions. Taking the majority view that the UK will also leave the EEA at the same time as leaving the EU under Article 50, unless there is a specific regulation in this regard, UK citizens and UK business will be subject to restrictions while investing in real property in Poland, as well as acquiring shares in many companies.

]]>https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-poland/feed/0Brexit Insight From the EU-27: Germanyhttps://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-germany/
https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-germany/#respondTue, 07 May 2019 11:49:37 +0000https://www.brexitlegal.com/?p=1586German legislators have adopted a number of Acts of Parliament in relation to Brexit both on the federal level and on the level of the 16 German states. Some of these regulate the “deal” scenario where the Withdrawal Agreement is ratified by the UK, and some of these regulate the “no-deal” scenario. The so-called Brexit … Continue Reading

]]>German legislators have adopted a number of Acts of Parliament in relation to Brexit both on the federal level and on the level of the 16 German states. Some of these regulate the “deal” scenario where the Withdrawal Agreement is ratified by the UK, and some of these regulate the “no-deal” scenario.

The so-called Brexit Steuerbegleitgesetz (Brexit Tax Accompanying Act) was adopted on 25 March 2019 and provides for a number of tax contingency rules in the areas of corporate tax, income tax, real estate transfer tax, inheritance tax and transformation tax, as well as contingency rules for the financial services sector, including banks, insurance companies, pension funds, payment services providers and other financial services providers, as well as special rules for German Covered Bond Banks. The act in particular contains a statutory authorisation for the German regulator BaFin to adopt further regulations, which BaFin will, however, only exercise if and once the UK ceases to be a member state of the EU without a deal.

The so-called Gesetz zu den Übergangsregelungen in den Bereichen Arbeit, Bildung, Gesundheit, Soziales und Staatsangehörigkeit was adopted on 8 April 2019 and regulates the “no-deal” scenario in the areas of Employment, Education, Health, Social Matters and Nationality.

The federal Brexit Übergangsgesetz (Brexit Transition Act) was adopted on 27 March 2019 and provides that in the event the UK ratifies the Withdrawal Agreement, each reference in German federal law to a member state of the European Union and companies and nationals of a European Union member state shall also mean, during the Transition Period pursuant to Articles 126 and 132 of the Withdrawal Agreement, a reference to the UK and companies from the UK. That rule is necessary, as Articles 126 and 132 and Article 127 (6) of the Withdrawal Agreement, which regulate the Transition Period, only apply in respect of European Union law but do not apply in respect of the domestic national laws of the 27 member states of the European Union (see this article for more analysis of this). The Parliaments of the 16 states of Germany have adopted (or are in the course of adopting) similar Brexit transition acts at state level.

The general principle prevailing in German politics and the economy is still that it favours a potential revocation of the Article 50 notice. The extension to 31 October 2019 has been welcomed. However, there is a growing tension that the ultimate decision to be taken in the UK whether 1) Article 50 is revoked, 2) Britain leaves with a deal or 3) Britain leaves with no deal, should be taken sooner rather than later in order to avoid further uncertainty for businesses and residents.

The current Brexit uncertainty is having an effect on driving competitors out of business, in particular airlines and affected businesses. An airport in northern Germany, for example, declared insolvency because of (amongst other reasons) FlyBMI going out of business. Such vulnerable businesses are, therefore, being circled by opportunistic investors.

]]>https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-germany/feed/0Brexit Insight From the EU-27: Francehttps://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-france/
https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-france/#respondThu, 02 May 2019 13:30:30 +0000https://www.brexitlegal.com/?p=1454The French Parliament authorised the government to take measures – known as orders (ordonnance) – which should otherwise be taken pursuant to law, in order to map out the consequences of a “no-deal” Brexit. The government had either six months or a year to pass those orders, following publication of the law. The government was … Continue Reading

The French Parliament authorised the government to take measures – known as orders (ordonnance) – which should otherwise be taken pursuant to law, in order to map out the consequences of a “no-deal” Brexit. The government had either six months or a year to pass those orders, following publication of the law.

The government was authorised to take any measure relating to the control of goods to and from the UK and relating to the administrative status of legal entities established in the UK and carrying out business in France. The orders define the conditions pursuant to which economic activities related to the UK and goods flowing to and from the UK can carry on.

The orders provide, in some instances, pragmatic adjustments to existing French legislation, unusual exemptions, and simplified administrative procedures and shorter delays to allow regularisation of the status of corporates or individuals concerned.

By way of example, the orders cover the following matters:

The carrying on by the beneficiaries of licences and authorisations for the transfer of products and materials (e.g. satellites, space rockets, etc.) to the UK, delivered pursuant to Articles L.2335-10 and L.2335-18 of the Code of Defense, prior to the exit of the UK, of the supply of such products and materials until the term of such licences and authorisations

The access of French entities to interbanking payment and settlement and delivery systems of third-party countries (including, of course, the UK) by ensuring the final nature of
transactions effected through these systems

The designation of a competent authority to supervise activities linked to securitisation

The introduction of specific rules for the management of certain collective investments

The continuity of the use of framework agreements (typically ISDA documentation) in the realm of financial services

The “sécurisation” of the conditions in which agreements entered into prior to the loss of recognition of licences granted to UK entities in France will be performed

The continuity of the transport of persons and goods between France and the UK through the Channel tunnel

The obvious aim of the orders is to preserve the interests of France and the status of French citizens and other persons whom European legislation protects.

Last but not least, a simplified temporary procedural regime is envisaged to enable the carrying out of works needed to build, modify or develop, with a degree of urgency, premises, facilities or port, train, airport or road infrastructures, as required to re-establish a control of goods to and from the UK.

The consequences of these measures could greatly affect not only the property of individuals, but also that of corporates, with a probable impact on their activities, which may not be neglected. Indeed, derogations and adjustments brought changes to the legislation
relating to expropriation, urban planning, zoning, preservation of cultural or historical sites, roadway, public domain, public procurement, rules applicable to maritime ports, public consultation and environmental assessment. It is clear that the wording of the orders was dictated by the urgency of the actions to take.

Other issues French corporates will face include:

The transfer of personal data to the UK

The export/import of goods

The access to funding to the extent it used to be provided by UK entities

]]>https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27-france/feed/0Brexit Insight From the EU-27: Czech Republichttps://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27/
https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27/#respondWed, 01 May 2019 08:47:08 +0000https://www.brexitlegal.com/?p=1442The Czech government adopted the Act No. 74/2019 Coll., which aims to soften the possible negative consequences of a “no-deal” Brexit. The act is intended to be a temporary measure, and all the instruments within it will last only until the long-term measures are adopted. The act is to be effective from the day the … Continue Reading

]]>The Czech government adopted the Act No. 74/2019 Coll., which aims to soften the possible negative consequences of a “no-deal” Brexit. The act is intended to be a temporary measure, and all the instruments within it will last only until the long-term measures are adopted.

The act is to be effective from the day the Treaty on the Functioning of the European Union and the Treaty on the European Union cease to be applicable to the UK and, simultaneously, if no agreement on the terms of the UK’s withdrawal from the EU (i.e. the Withdrawal Agreement) is adopted. Nevertheless, the act sets the deadline to 31 December 2020 at the latest. During this period, British citizens will be guaranteed equal treatment in 18 selected areas as if they were still European Union citizens. The Czech government expects that there will be reciprocity from the British side.

The areas dealt with by the act include regulation of obtaining Czech citizenship; marriage and registered partnership issues; access to the labour market and eligibility for unemployment benefits; income tax; recognition of professional qualifications; and provision of legal services by citizens of the UK and similar.

The Czech Republic’s government favours a Brexit on the basis of the Withdrawal Agreement and is against a “no-deal” Brexit. The Czech government is taking a cautious approach to Brexit: the majority of the government members did not want Britain to leave the EU. The Czech Prime Minister said he would very much like the British to change their minds, and is willing to support a Brexit postponement for up to one year. According to the Prime Minister, Britain would “…be given time to finally organise its inner affairs”. At the same time, the Prime Minister promised that the Czech Republic would not make life difficult.

On the other hand, even though the uncertainty regarding the issue of Brexit can have a negative impact on both the EU and the UK, a non-negligible part of the public in the Czech Republic, including some opposition politicians and economists, supports Britain’s decision to leave the EU and would even welcome a “no-deal” Brexit, as they argue that the UK is pushed too hard by the EU.

The Czech Republic is trying to prepare for all Brexit permutations. A “no-deal” would cause major issues, especially in the trade in goods or services. In the event of Brexit with the Withdrawal Agreement – which would likely keep the UK in the Customs Union – this would likely prevent problems with the import of goods and services. The Withdrawal Agreement is also supposed to continue to protect geographical designations, trademarks and other intellectual property rights. It would also allow for the free movement of judicial decisions and mutual participation in public procurement.

Although a Withdrawal Agreement is expected to be concluded in some form, some potential issues may remain. The agreement would probably give British companies only a limited access to the Czech financial market. From this point of view, setting up an establishment in the EU might be a solution for UK financial institutions.

It is also uncertain whether the mutual recognition of professional qualifications will remain effective once the transition period expires. For this reason, securing local qualifications as early as possible, especially for key employees, is important.

The UK will also exit the European Atomic Energy Community Euratom, which could have some impact on the energy sector. Reviewing and, if necessary, amending supply contracts will be critical. Czech economists are also warning against a possible rise in electricity prices due to expensive emission allowances, which will have a detrimental impact on the manufacturing sector in particular.

]]>https://www.brexitlegal.com/2019/05/brexit-insight-from-the-eu-27/feed/0An EU Analysis of Brexithttps://www.brexitlegal.com/2019/04/an-eu-analysis-of-brexit/
https://www.brexitlegal.com/2019/04/an-eu-analysis-of-brexit/#respondMon, 29 Apr 2019 10:16:57 +0000https://www.brexitlegal.com/?p=1436The EU-27 member states have been very carefully observing the UK domestic political manoeuvering and posturing this year. The predominant view in the EU-27 is that a managed “deal” scenario is far more preferable to a potentially chaotic “no-deal”. At the same time, precautions have been taken to prepare for a “no-deal” scenario. The EU-27 … Continue Reading

]]>The EU-27 member states have been very carefully observing the UK domestic political manoeuvering and posturing this year. The predominant view in the EU-27 is that a managed “deal” scenario is far more preferable to a potentially chaotic “no-deal”. At the same time, precautions have been taken to prepare for a “no-deal” scenario. The EU-27 are not willing to renegotiate the Withdrawal Agreement for fear of neverending negotiations with the UK. They have instead pointed to further clarifications and changes to the Political Declaration.

The 10 April 2019 EU Summit meeting was contentious – in light of the unclear UK position, a group of moderate voices (including Germany and Ireland) were seeking a longer extension period (of 12 or more months), while other countries, such as France, were advocating for a much shorter extension. Various member states clearly questioned why the EU-27 should provide yet another extension in light of the lack of constructive developments in the UK, and thereby, also take on political and legal risk related to the upcoming EU elections taking place between 23 and 26 May. Some of the critical voices even expressed doubts whether the UK would act in good faith during a lengthy Brexit delay, as critical decisions about the future of the EU need to be taken in the coming months (e.g. regarding the EU budget 2021-2027 or the selection of a new EU Commission President).

Despite such concerns, the fear of being blamed for a hard Brexit scenario led EU-27 leaders to agree on yet another Brexit extension until 31 October 2019. Thus, the moderate voices, led by German Chancellor Merkel, ultimately prevailed with their desire to again aim for a managed “soft” Brexit in light of the negative consequences a hard Brexit would entail for all parties involved.

]]>https://www.brexitlegal.com/2019/04/an-eu-analysis-of-brexit/feed/0A Glimpse of the Mood in UK Politicshttps://www.brexitlegal.com/2019/04/a-glimpse-of-the-mood-in-uk-politics/
https://www.brexitlegal.com/2019/04/a-glimpse-of-the-mood-in-uk-politics/#respondThu, 25 Apr 2019 12:54:29 +0000https://www.brexitlegal.com/?p=1433The mood in the Conservative Party is bleak. Many of the political challenges with Brexit can be traced back to the 2017 election. Prime Minister Theresa May lost her majority and was only able to retain power by making a deal with the Democratic Unionist Party (DUP) from Northern Ireland. The arithmetic in Parliament is … Continue Reading

]]>The mood in the Conservative Party is bleak. Many of the political challenges with Brexit can be traced back to the 2017 election. Prime Minister Theresa May lost her majority and was only able to retain power by making a deal with the Democratic Unionist Party (DUP) from Northern Ireland.

The arithmetic in Parliament is such that if even a small number of Conservative members of Parliament (MPs) defy their own government, then (alongside the opposition) they can block any progress on almost any matter. For this reason, those at more extreme wings of the Conservative Party, whether for a hard Brexit and or for no Brexit at all, have been able to stall all progress.

This led to Theresa May, in an act of desperation to find the votes in Parliament, reaching out to the opposition. An already besieged and unpopular leader asking for support from her political opponents has gone down extraordinarily badly with many of her own MPs. There is no clear mechanism to remove her as leader, but for the first time, those who seek her crown are openly and properly organising their own campaigns.

It is doubtful whether agreement between the government and opposition is even possible. If it is, it is likely to require so “soft” a Brexit as to infuriate large tracts of the Conservative Party. The much-touted solution of Customs Union membership is far more controversial than some commentators assume. Alongside Labour Party rebels, so many Conservative MPs would defy such a deal that even with the official opposition on board, it might not pass.

With the long extension to October now agreed, Theresa May looks set to attempt to hold on to power. As such, we can expect more drift, infighting and several catastrophic electoral moments for the Conservatives. In the local elections, they are defending seats last fought at the 2015 high watermark. In the now-likely European elections, even some Conservative MPs are openly refusing to say they will vote for their own party.

These moments and many more could finally topple the Prime Minister. But without a clear mechanism to force such an outcome, she could equally continue to cling on in defiance of all precedent. The leadership contenders who have geared up in recent weeks could now face a longer campaign than they had hoped. Whether they can maintain momentum, and avoid disaster, remains to be seen.

]]>https://www.brexitlegal.com/2019/04/a-glimpse-of-the-mood-in-uk-politics/feed/0Brexit: What Are the Options for the UK Now?https://www.brexitlegal.com/2019/04/brexit-what-are-the-options-for-the-uk-now/
https://www.brexitlegal.com/2019/04/brexit-what-are-the-options-for-the-uk-now/#respondWed, 24 Apr 2019 09:48:08 +0000https://www.brexitlegal.com/?p=1429Procedurally, the UK has three options: Ratify the Withdrawal Agreement (with possible accompanying changes to the Political Declaration on the future relationship with the EU) before 22 May, and cancel participation in the European Parliament elections Ratify the Withdrawal Agreement (with possible accompanying changes to the Political Declaration on the future relationship with the EU) … Continue Reading

Ratify the Withdrawal Agreement (with possible accompanying changes to the Political Declaration on the future relationship with the EU) before 22 May, and cancel participation in the European Parliament elections

Ratify the Withdrawal Agreement (with possible accompanying changes to the Political Declaration on the future relationship with the EU) before 30 June, and ensure that when the new European Parliament session opens on 2 July, there are no UK members of the European Parliament (MEPs)

Take longer over the process, accepting that the UK will elect MEPs who will take their seats in the European Parliament, and run toward the 31 October deadline agreed with the European Council

The only realistic route to either of the first two outcomes lies in the talks between the government and the Labour Party (Labour). Like the government, Labour can accept the Withdrawal Agreement – and the debate between them is over the future relationship and how any agreement would bind a (potentially more pro-Brexit) successor to the Prime Minister.

The central issue in the talks is future customs arrangements (Labour has argued for participation in a Customs Union), but the possibility of a confirmatory public vote (the Labour leadership is split on this, but it is strongly supported by many Labour members of Parliament [MPs] and party members) looms in the background. In Parliament, on 11 April, the Prime Minister indicated that, rather than seeking another “meaningful vote” on the withdrawal package, the government might bring the result of any talks with Labour back to the House of Commons by trying to pass the Withdrawal Act, the implementing legislation, which gives effect to the provisions of the Withdrawal Agreement. Passage of the Withdrawal Act would be enough to enable the UK to ratify the Withdrawal Agreement without having to hold a further “meaningful vote”.

In the event that the government cannot reach agreement on a way forward with Labour, it will seek agreement with Labour on a procedure to put a limited number of options back to Parliament to try to reach agreement on one of them, which the government will try to agree with Labour that both should then support through its passage through Parliament. Labour has not yet committed to this.

The government will hope that the prospect of the UK having to participate in European Parliament elections nearly three years after voting to leave the EU will concentrate MPs’ minds. Certainly, the Conservative Party is in a state of disarray and anger, and the Eurosceptic strand of British politics is mobilising: Nigel Farage (MP) has started a new Brexit Party, which appears to be polling well, and his old UK Independence Party (UKIP) (whose support has collapsed since the referendum) would see it as a chance to relaunch themselves. On the other side of the argument, pro-European parties (e.g. the Liberal Democrats, Scottish and Welsh nationalists, and the new Change UK) will hope that they can mobilise the up to 1 million who marched in London last month, and the 6 million or so who have signed the Revoke petition online. Of the two major parties, initial polling suggests that the Conservatives stand to do badly, damaged by incumbency, by the messiness of Brexit, and by the Brexit Party/UKIP on one side, and (probably to a more limited extent) Change UK and the pro-European parties on the other. Labour, however, does not look to be so negatively affected. On both sides of the debate, European parliamentary elections are likely to be seen as a proxy for the current state of public opinion. The incentive to avoid this is strongest for the Conservative Party.

If the government does not succeed in agreeing a way forward with Labour, which delivers Brexit in May or June, wider political options may open. The Prime Minister looks determined to carry on, and cannot formally be challenged in the Conservative MPs’ confidence vote until December, but the pressure on her to stand down will grow. The results of the elections will be seen as an indicator of the current state of pro-Brexit and pro-European opinion – recent polling suggests a hardening of “no-deal” Brexit opinion, but also a drift in the overall position towards Remain. The “confidence and supply” agreement between the Conservatives and Northern Ireland’s Democratic Unionist Party (DUP), which gives the government its slim parliamentary majority, is up for renewal in June. A General Election would be a possibility within the 31 October deadline, particularly if there is a new Conservative leader (and Prime Minister), but neither major party really wants one. A second public vote/confirmatory vote is creeping up in likeliness in these circumstances, but while the decision to hold one could be taken before 31 October, the vote itself would take longer and require a further extension to the Article 50 deadline.

Meanwhile, the UK government has formally halted its “no-deal” Brexit preparation, and stood down the 6,000 officials involved.

]]>https://www.brexitlegal.com/2019/04/brexit-what-are-the-options-for-the-uk-now/feed/0It’s April, and the UK is still in the EU – This is not an April Foolhttps://www.brexitlegal.com/2019/04/its-april-and-the-uk-is-still-in-the-eu-this-is-not-an-april-fool/
https://www.brexitlegal.com/2019/04/its-april-and-the-uk-is-still-in-the-eu-this-is-not-an-april-fool/#respondMon, 01 Apr 2019 13:00:07 +0000https://www.brexitlegal.com/?p=1424Lord, what fools these mortals be – Shakespeare, Midsummer Night’s Dream Last Friday should have been the day the UK left the EU. Instead the Westminster Parliament, in a rare Friday sitting, rejected the Withdrawal Agreement component of the Prime Minister’s Brexit deal by a substantial majority. What has happened? Parliament has imposed “indicative votes” … Continue Reading

Last Friday should have been the day the UK left the EU. Instead the Westminster Parliament, in a rare Friday sitting, rejected the Withdrawal Agreement component of the Prime Minister’s Brexit deal by a substantial majority.

What has happened?

Parliament has imposed “indicative votes” on possible Brexit outcomes on a reluctant Government, but then failed to produce a majority in favour of any outcome

The Prime Minister has played her last card in trying to get her deal across the line, by saying she would resign when it was approved, but Parliament has again refused

The EU extension of Article 50 to 22 May has formally lapsed, and the default is extension to 12 April, then no deal Brexit unless the UK has come up with a credible alternative plan

What next?

The Prime Minister may have one last try to get her deal approved, but unless the Government can get the Northern Ireland Democratic Unionist Party (DUP) to support it, this looks unlikely to succeed

Parliament will try again on 1st April (colloquially known as April Fool’s Day) to establish which alternative option could command majority support

If both fail, the PM’s last big decision will be whether push through to a “no deal” Brexit on 12 April (against the now well established will of Parliament), or to accept an alternative Parliament supports and seek a short extension with re-negotiation of the Political Declaration on the future relationship, or to seek a much longer extension of the Article 50 process.

What does it all mean?

A prominent historian last week described the position as the greatest constitutional crisis in the UK in 300 years. Parliament cannot agree on anything, except what it doesn’t want. The Prime Minister’s last gambit looks unlikely to succeed, but has deprived her of the last vestiges of authority. The EU looks on with irritation, but also concern. Up to a million people marched in London in favour of a further referendum. A petition to revoke Article 50 gathered 6 million signatures. On 29 March, supposedly “Brexit Day”, angry demonstrators converged on Parliament, deprived of what they thought they had voted for. The public are increasingly fed up with the antics of politicians. Business is exasperated.

The options however remain the same: deal (though not necessarily the PM’s deal), no deal, or no Brexit. If Parliament is against both Mrs May’s deal and no deal, and against any alternative deal, the logic points to “no Brexit”. But only 184 MPs supported that option last Wednesday evening. Realistically, unless the PM can somehow bring the DUP round and give her deal a last try (if the Speaker will allow it), the options seem now to be a long extension to the Article 50 process (probably at least a year, and with the need to resolve the European Parliament elections question), or no deal Brexit on 12 April. “No deal” is clearly against the will of Parliament. It attracted only 160 MPs in favour last Wednesday, and the largest vote against of the evening (400 MPs). No one knows what Theresa May thinks, but if she decides “no deal” is the only way to deliver Brexit, there is quite a high likelihood of it happening. It could also happen simply because the UK and the EU fail to take the necessary decisions in time. The chances of a “no deal” Brexit have certainly increased over the past week, but it remains an unlikely outcome.

So does everything else. Downing Street has spent the weekend in agonizing deliberations. A number of pro-Brexit Cabinet Ministers, apparently backed by a letter signed by 170 Conservative MPs, have told the PM they will resign if she allows a move towards a softer Brexit, eg. including participation in a customs union, or allows a delay to Brexit beyond 22 May. A number of pro-EU Cabinet Ministers have been clear in private and in public that they will resign if she adopts “no deal” as Government policy. The Prime Minister’s objective to avoid splitting the Conservative Party looks increasingly difficult. There has been much talk of a General Election as a way out, but neither major party really wants one – it is hard to see how either could write a coherent manifesto – and there is a strong chance that it would not resolve anything. And most Conservative MPs are absolutely determined not to fight another election under Theresa May’s leadership.

What could happen?

The effective deadline for the UK Government and Parliament to decide a way forward is around 8/9 April. The European Council will meet on 10 April to assess the situation and decide whether to extend the Article 50 deadline beyond 12 April. It is impossible to predict what Governmental and Parliamentary manœuvres will lead to this week.

The Prime Minister may well try to get her deal through again, but with resolute opposition from the DUP (which is to do with keeping Northern Ireland’s place within the United Kingdom, not a particular Brexit concern), and with Labour MPs concerned that if the PM’s deal is approved it will be implemented by a new Prime Minister who favours a harder Brexit, this looks a forlorn hope. Given the impossibility now to make any significant changes to the Withdrawal Agreement element, it looks hard to see how the DUP could ever be brought to support it. Labour MPs would be more open if the Political Declaration was re-negotiated to provide more explicitly for a softer Brexit, but that would re-ignite opposition among Conservative MPs.

Among a wide range of other unlikely outcomes, the three most probable are:

no deal Brexit on 12 April, possibly (if the European Council so decides) with a short extension (not beyond 22 May) so that both sides can finalise preparations

if Parliament has settled a way forward, which the Government accepts, and the European Council believes credible, a short extension (again, not beyond 22 May) to revise the Political Declaration to take account of the new way forward, contingent on evidence of Parliament’s willingness to approve the Withdrawal Agreement

a much longer (a year or more) delay to the Article 50 timetable, on EU terms (which are likely to include participation in the European Parliament elections in late May), which would be very likely to lead to a change of Conservative Party leader (and Prime Minister), and possibly a General Election. The chances of a referendum to confirm public support for whatever model of Brexit emerges are also growing.

Of these, the first and the third look more likely than the second – the standard of proof the European Council would need to see the second as credible looks hard to achieve in such volatile politics in Westminster.

Implications for our clients

The range of options, and timescales, three days after the UK should have left the EU, remains as wide as ever. We are still some way from knowing what future trading relationships will look like. But any final “no deal” preparatory steps should be taken between now and 12 April: it is not our predicted outcome, but the chances of it happening have increased.

If you need help with any aspect of your Brexit planning and preparation, please do get in touch with our Brexit team. We have sectoral and subject expertise, backed by political and legal analysis, which can ensure you are properly prepared.

]]>https://www.brexitlegal.com/2019/04/its-april-and-the-uk-is-still-in-the-eu-this-is-not-an-april-fool/feed/0Brexit – Where do we stand 18 March 2019?https://www.brexitlegal.com/2019/03/brexit-where-do-we-stand-18-march-2019/
https://www.brexitlegal.com/2019/03/brexit-where-do-we-stand-18-march-2019/#respondMon, 18 Mar 2019 11:43:19 +0000https://www.brexitlegal.com/?p=1416Summary Government strategy thrown into disarray by Speaker’s ruling that Parliament cannot vote on the May withdrawal deal again The threat of no deal Brexit on 29 March has been reduced, but not entirely removed The threat of no deal Brexit at some point in the future is still there, but remains small Brexit will … Continue Reading

Monday 11th: Theresa May made a late night dash to Strasbourg to meet Commission President Juncker, and returned with what she said was a legal improvement to the Irish border backstop, making it easier for the UK to withdraw.

Tuesday 12th: Early hopes that momentum could build towards the vote on the PM’s withdrawal deal were dashed when her colleague the Attorney-General published his advice: while the PM had secured stronger exit rights in the event of demonstrable bad faith by the EU, the improvement secured by the PM did not change his core legal advice on the risk of the UK being “trapped” in the backstop.

Parliament voted by 391 votes to 242 (a majority of 149) to reject the PM’s withdrawal deal: a significant improvement on the historic 230 majority against on January 15th (39 MPs switched sides, including some prominent Brexiteers), but still one of the largest majorities against a Government proposal.

Wednesday 13th: Parliament debated a Government motion to rule out a no deal Brexit, but also noting that no deal remains the default in the absence of a deal, which was then amended (by a majority of 4 votes) to rule out no deal in any circumstances, turning the Government against it. The amended motion passed by a majority of 43 (321 to 278) with a number of Ministers abstaining rather than voting against. The motion has no legal force, but is a strong expression of Parliamentary opinion which the Government cannot simply ignore.

At the beginning of the day, the Government published its tariff plan for a no deal Brexit (87% of imports to be tariff free) – produced with minimal consultation of business – and its plan for the Irish border (which could be characterised as a combination of smugglers’ free-for-all and an honesty box so unobtrusive and far from the border as to give no offence)

Thursday 14th: Parliament debated a Government motion to request an extension to the Article 50 timetable until the end of June, so long as Parliament has approved the Brexit deal, or if Parliament has not approved the Brexit deal the Government will need a longer extension, thus requiring the UK to participate in the European Parliament elections in May. The motion was approved (412 to 202 votes) after a number of amendments failed, including one (by just 2 votes) which would have given Parliament the power to hold a series of indicative votes on alternative Brexit models, and one (by a wide margin) calling for a further referendum.

Monday 19th: the Speaker ruled – following Parliamentary convention – that Parliament could not vote twice on a proposition that was the same or substantially the same: “a demonstrable change to the proposition would be required” for there to be a further vote on the PM’s withdrawal deal. “For something to be different it has to be fundamentally different, not in terms of wording but in terms of substance.”

The Government has announced that it will bring forward a Statutory Instrument to make the necessary change to UK law to allow an extension to the Article 50 timetable.

What happens next?

According to the Government’s plan, the withdrawal deal would have come back for a further meaningful vote in the first part of this week. It was already looking difficult for the Government to turn the 75 MPs they would need to switch votes, when the Speaker ruled that there must be a demonstrable change to the Government’s withdrawal deal (in this blog, by “withdrawal deal” means Withdrawal Agreement – the proposed Treaty – and the Political Declaration on the future relationship between the UK and the EU). The Speaker is understood not to have given the Government any notice of his ruling. It is open to the Government to bring the same issue for decision in a future session of Parliament.

Formally, the legal position remains that, in the absence of anything else, the UK will leave the EU on 29th March. Unless the UK decides to rescind the Article 50 notice, and effectively cancel the Brexit process (which the Government has ruled out doing), for the Brexit date to change, two things have to happen:

The EU has to agree to an extension to the Article 50 process. This is on the agenda for the European Council meeting this week, on 21st March. The European Council can only decide to extend the process by unanimity. The UK – and the Prime Minister particularly – will come under great pressure to specify the purpose of the extension. Then there is the question for how long. In the view of some jurists, if the UK is a member of the EU still on 23rd May, it must participate in the European Parliament elections. But the Parliament does not convene until 2nd July, so the UK’s failure to elect MEPs will have no practical effect until then. A strict interpretation would limit an extension to 22 May, but the EU may judge there to be no risk to any challenge to the validity of the Parliament so long as the UK is no longer a member by the time the Parliament convenes. However it is clear that any extension beyond 1st July puts the question of UK participation in the European elections squarely on the table, in addition to whatever other conditions the European Council decides to impose.

UK law (the European Union Withdrawal Act) has to be changed, which requires a Statutory Instrument – proposed by the Government – to be approved by both Houses of Parliament.

“The report of my death was an exaggeration” Mark Twain

The Government’s plan of course relied on Parliament reversing majorities of 230 and 149 against the PM’s withdrawal deal. The withdrawal deal has been pronounced dead several times by numerous MPs and commentators, but it is proving remarkably resilient. It may still be premature to pronounce it dead, though the Speaker’s intervention has certainly blown a large hole in its life-support system. Frankfurter Allgemeine Zeitung asked at the end of last week whether it is a zombie or a phoenix – it is clearly now in zombie state, but do not be surprised if it re-emerges at some point in the future. Government Ministers are still talking about the possibility of a further vote, and the procedural books are doubtless being scoured for a way to make that happen. Assuming change is necessary, it will take longer: of the key elements of the deal, the Withdrawal Agreement is the hardest to change. Achieving substantial change, as well as finding alternative ways to address the Irish border backstop, can more easily be done by putting more substance into the Political Declaration – given the complexion of Parliament, that process is however more likely to lead to further challenges to the UK’s red lines, and a softer Brexit.

So where does it all leave us?

Parliament has asserted itself, but has not yet succeeded in taking control. The Speaker has asserted himself and dropped a bomb on Downing Street. The Prime Minister’s authority in her Cabinet, party and Parliament has been seriously – perhaps fatally – eroded. Last week saw four Cabinet Ministers defy a three-line whip and keep their jobs, and a Cabinet Minister closing a debate with a strong argument to Parliament to support the Government’s proposal for a realistic extension to Brexit and then voting against it himself. This week has already seen the Government fail to anticipate the Speaker upholding long-standing Parliamentary precedent (dating back to 2nd April 1604) and so deny the Prime Minister her preferred strategy of forcing Parliament into a choice between the withdrawal deal and no deal Brexit on the one hand, or long delay on the other. Unless the Government can find some way to get round the Speaker’s ruling, the choice is now clear: long delay (which may yet lead back to the withdrawal deal in time), or no deal Brexit. The first is the expressed will of Parliament; the second is the law of the land.

The question now for British Parliamentarians is whether you try to define the future relationship between the UK and the EU before exit or after. There has been much focus on the lack of unilateral withdrawal provisions from the Irish border backstop. But the lack of unilateral ability to withdraw from or radically deviate from the Good Friday Agreement is the underlying determinant (and no British politician would argue that the UK should go back on the GFA). The GFA does not require there to be no hard border, but there is much argument that the re-establishment of hard border infrastructure would mark a strongly regressive step in the implementation of the GFA, and as such would be incompatible with the GFA. Hence the UK Government’s rather preposterous no deal border policy: you simply leave the border wide open.

The Brexiteers have welcomed the Speaker’s decision: it removes them from the immediate trap the Government had set for them. It opens the way for a “no deal” Brexit, which some of them want. However, given the clear majority in Parliament against a “no deal” Brexit, and the Speaker’s ability to use the flexibility of Parliamentary convention, the Speaker’s ruling also makes the prospects for a longer delay to the Artcile 50 process, and more Parliamentary input to the definition of the future relationship – both of which point strongly towards softer Brexit model – more likely. The Government has said it will propose the necessary changes to UK law to delay the Brexit date: this is likely to command a strong Parliamentary majority. Parliamentary opinion would define the future relationship in ways likely to lead to closer integration with the EU than the Brexiteers would want. The Brexiteers favour a relationship along the lines of the EU-Canada FTA, but even this would need a very high degree of regulatory and tariff alignment in order to minimize the Irish border impact (unless new technology provides an answer at some point in the future). Labour argues for a renewed customs union, which would constrain the UK’s ability to run its own trade policy. Pro-European MPs favour the European Economic Area (Norway) – EEA, which would raise questions about the point of Brexit (Norway’s position is best described as a waypoint on the way in, not an exit route). Increasing focus is being paid to a cross-party model called “Common Market 2.0”, which would involve the UK going into the European Free Trade Area – EFTA (ironically founded by the UK in 1960). EFTA currently has four members, three of which (Norway, Iceland and Liechtenstein) are members of the EEA; Switzerland is not. In fact, if Parliament could agree the future direction quickly, the adaptations to the current withdrawal package need not take very long: the Withdrawal Agreement would remain; the Political Direction on the future relationship would be amended, and by doing so provide a pre-agreed route out of the Irish border backstop (and the substantive change the Speaker has ruled necessary). If that is a pre-existing structure (EEA or EFTA) there would be much greater comfort about sorting out the details later. If it is a wholly new FTA, there is much more uncertainty and hence in the mind of the Brexiteers scope for the EU to leverage its strength and veto over the route out of the backstop.

Meanwhile, there’s another party involved in this process….

Over in the EU, the UK’s Parliamentary contortions have given rise to exasperation and irritation. The Prime Minister will write to the European Council requesting an extension to the Article 50 process, which will be debated at the Council’s meeting on 21st March. While the EU is unlikely to refuse the UK’s request (and thus precipitate a “no deal” Brexit), the debate is unlikely to be a comfortable one for the Prime Minister. It would not be unreasonable for the EU leaders – who have lost faith in Theresa May as a negotiating partner – to expect her to be clear about the purpose of the extension: simply giving more time to allow the UK’s parliamentary stalemate to continue is very unlikely to command support. If the Prime Minister is unable to give a satisfactory description of the purpose of the extension, it is likely that the EU will make any agreement to extension conditional.